The business behind the show

Universal Music Group expected to bid for EMI Group

Universal Music Group is expected to be among the bidders for EMI Group, according to a person close to the label.

EMI's owner, Citigroup Inc., formally put the 114-year-old music company up for sale Thursday, opening a bidding process that's likely to take months.

Universal, the largest of the four major record companies, avoided making a serious run at Warner Music Group when it was up for auction earlier this year, primarily because a merger of the two companies would have had trouble clearing antitrust hurdles in Europe and in the U.S., where Warner and Universal each have a double-digit market share.

But EMI is a different story. So far this year, its share of the U.S. recorded music market has been just under 9%, according to Nielsen Soundscan. Universal has had just under 30% of the market, while Warner's share has been 19%.

The thinking is that a Universal-EMI mashup would be an easier sell to regulators than a Universal-Warner deal, according to the knowledgeable person.

Will regulators necessarily agree? Looked at globally, EMI is not that far apart from Warner. EMI's worldwide market share hovers just under 10% while Warner is around 12%. And anytime the dominant player in the market makes a move, it's likely to be put under a microscope.

That said, Universal could take a gamble, as it did when it purchased BMG's publishing business in 2006 for $2.1 billion and assumed most of the risk of making sure the deal passes regulatory muster.

This time, Universal is most interested in EMI's recorded music business, with a talent roster that includes Katy Perry, Beastie Boys and Lady Antebellum. But Universal could bid for the entire company, including EMI's publishing unit, which handles the songwriting rights for artists such as Jay-Z, Snoop Dogg and Gorillaz.

As with Warner, which fetched $3.3 billion from oil baron Len Blavatnik, EMI could attract similarly priced bids. EMI posted $2.6 billion in revenue in its fiscal year ended March 2010, according to its most recent publicly reported earnings release. Warner had just under $3 billion in annual revenue in its 2010 fiscal year ended in September.

Warner is also expected to make a bid for EMI once its own deal is complete sometime this summer.